Headlines this morning:
*Mkts return 2.7% for the month of February as asset managers held the indexes in check as they close out the month. Is now the time for a correction?
* "Bernanke wrestling with Conundrum" - Economy still in stall speed (isn't growing very fast) yet
unemployment moves lower - How can this be so? Maybe it is the fact that people are just falling off the unemployment rolls at a faster clip? "The decline in the unemployment rate over the past year has been somewhat MORE rapid than might have been expected given that the economy appears to have been growing at or below it long term trend". This comment underscores the concern that the recovery is "uneven and modest".
*Stockton, CA - Battling declining tax revenues and rising employee costs - considers BANKRUPTCY as other California cities warn of the same predicament.
*Bundesbank Criticizes ECB Loans - launches a powerful attack on Mario Draghi - warning of increasing risk and the potential costs for Germany in its role as the EZ biggest creditor nation and sparks fears of the EZ ability to deal with this crisis.
* MF Global's final days reveal a "rapid" $165 mil transfer - just 5 days prior to the collapse of the company. The transfer request and action happened within minutes - 15 to be exact - yet within mins of that transfer someone "realized" there was a problem. Funny, but they were "unable" to reverse the transaction as the money somehow disappeared.
And onto yesterday' mkt action: Despite the ECB handing out $700 billion to 800 European banks the U.S. stock market stumbled with all major indexes closing lower in what may feel like a "sell the news" reaction. Could it be that the markets had already discounted this move and rallied for weeks in anticipation of the large ECB loan infusion? Were investors expecting a bigger loan amount - say $ 1 tril? Was the reaction "Not to hot or not to cold but just right?"
Martin van Vliet, senior euro-zone economist at ING Bank in Amsterdam, had this to say - "In our view it is a Goldilocks outcome: not overly large as to generate concern about the fragility of the European banking system, but high enough to pre-fund a substantial share of maturing bank debt and spark more buying of Italian and Spanish paper." A lot will turn on what the European banks actually do with all this "cheap money". Will they use it
to support the countries with sovereign debt problems or will they use it as a capital reserve buffer?
Hey - here is an idea - they could use the money for traditional banking purposes, like lending it out? But can they really? If they don't use it to buy Euro zone bonds that are rolling over at dangerous levels, then we could potentially see a renewed bailout crisis in Europe and the song plays on.
Back to the States
- Uncle Benny throws cold water on the party by not guaranteeing any US additional easing (at this time)- mkts are not liking that.
And soon after he began his speech - an unusually large trade of more than 100,000 futures on gov't debt hit the system, selling spread to equities, commodities and treasuries as traders were waiting for Uncle Benny to pump more money into the system and when he did not they threw a temper tantrum.
Reminds me of the Rolling Stones - "You Can't Always Get What You Want". The notion that there had been some "expectation" of a QE3 program built in - highlights the risk of the Fed stepping away. Could this be the catalyst for that expected correction?
Onto the $. It moved a bit higher - some +0.59% - maybe not so dramatic BUT the fact that the dollar made a bounce here at the Fibonacci 50% retracement level is significant, especially when combined with the fact that the December lows are also at this level - now acting as support. Gold tells a better story for the strengthening dollar and the desire for the Fed to pump pump pump, as the $ gets stronger (less Fed intervention) commodities (food, oil, metals) should come under some pressure and we saw just that.
Look at the leveraged inverse fund UGL - this is the Profunds Ultra Gold and is designed to move 2X the daily performance of the underlying - in this case - Gold Bullion. The fund was down 10.6% yesterday - breaking its 200 DMA but stopping right at its 50 DMA; and with Gold's 50 DMA still below its 200 DMA, some will argue that Gold continues to be in a short term bearish pattern so as the $ gets stronger then Gold could remain under pressure.
Oil backs off a bit - but there is a disconnect in the oil mkt due to the tensions in the mideast causing speculators to jump in vs. fundamental real demand. So oil will continue to march to its own beat as long as the Geo-political risks remains. More to follow.
Overnight in Asia - mkt were stagnant. China did report a "better PMI" of 51. Anything above 50 is considered positive, so this number confirms that China continues to move ahead despite what is going on in Europe, and the US. Japan -.04%, China flat, ASX -1%, Hang Seng -0.8%.
In Europe this morning though - mkts are higher - seemingly ignoring the lack of Fed action and concentrating more on the European crisis. The meeting of the special committee to determine whether or not a Greek default is really a credit event is taking place now. So mkts await: FTSE + 0.6%, DAX +0.6%, CAC 40 +.06% and Eurostoxx +.08%.
US Futures are +3 this morning. There is a fair amt of macro data on the plate today: Init Jobless claims - exp of 355k and all eyes will be watching this number closely to see if it continues to improve. Any improvement will have the administration throwing a party.
Cont Claims of 3.48 mil, Pers Inc exp of 0.4%, Pers Spend +0.4%, Construction Spend of 1%, ISM Manf - this is important - exp of 54.5- anything above 50 is positive and expect this to be a focus today.
Right now - Futures are trading at 1368 - below the recent high of 1374. It is a new month - we have 30 days till the end of the qtr. A pullback in the early part of the month would be welcome as asset managers will once again look to push the mkt higher into qtr end. If no pullback, then just look for the momentum to carry us upwards as PM's capitulate. March 9th is a big date as the results of the Greek creditors will be announced...will they accept or won't they?
Take good care -
KP
So today we are doing Pork -
Herb and Balsamic Marinated Pork Chops-
Start with 4 / 6 pork chops on the bone....thin or thick cut - whatever you like. Rinse and pat dry. Set aside. In a bowl - add olive oil, balsamic vinegar at the ratio of 1:1.
Next add dried rosemary & thyme and fresh basil. Season the chops with salt and pepper. Marinate the chops in the oil/balsamic mixture for at least 1 hr....(You can prepare up to this point the day before and leave marinating in the fridge overnight.)
When ready to eat -preheat oven to 400 degrees. Place chops in a baking dish - with the marinade....cover tightly and place in oven and cook for 30 mins. Remove cover - turn chops and continue cooking for another 20 mins - depending on thickness of chops.
**If you make this dish in the summer - then feel free to grill the chops on a seasoned hot grill - careful not to dry them out........
You can serve this dish with roasted potatoes or mashed potatoes and a green vegetable like French cut green beans - steamed and dressed with a dab of butter and s&p. As usual also serve with a salad of Boston lettuce, arugula, red onions, cucumbers and tomatoes.
Buon Appetito
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